Top Frequently Asked Questions for Earned Income Tax Credit

My child was born and only lived 40 minutes. Can this child be my qualifying child for the earned income credit and the child tax credit?

Answer:

Yes, if you meet the requirements, you may claim:

1. The Earned Income Credit

Generally, a child must live with you in the United States for more than half of the tax year to be a qualifying child. You may treat a child who was born alive or died in 2016 as having lived with you for more than half of 2016 if your main home was the child’s main home (or would have been) for more than half of the time he or she was alive in 2016.

The earned income credit requires that you provide a valid social security number (SSN) for your qualifying child. If you meet all of the other requirements to claim this credit, and your child was born and died in 2016 and didn't have an SSN, instead of an SSN, you may enter "DIED" on line 2 of Schedule EIC (Form 1040A or 1040), Earned Income Credit, and attach a copy of the child's birth certificate or a hospital medical record showing a live birth. 

   2. The Dependency Exemption and/or Child Tax Credit  

Generally, the child must live with you for more than half of the tax year to be a qualifying child. You may treat a child who was born alive or died in 2016 as having lived with you for more than half of 2016 if your main home was (or would have been) the child's main home for more than half of the time he or she was alive in 2016. Whether your child was born alive depends on state law.

If you meet all of the other requirements to claim the exemption or credit, you usually must provide a taxpayer identifying number (TIN) for the child. If your child was born and died in 2016 and didn't have an SSN or other TIN, instead of a TIN, you may enter "DIED" in column 2 of line 6c of the Form 1040 or Form 1040A, U.S. Individual Income Tax Return, and attach a copy of the child's birth certificate or a hospital record showing a live birth.

If the custodial parent releases a claim to exemption for a child by signing a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or a substantially similar statement, may the noncustodial parent claim the child as a qualifying child for the earned income credit?

Answer:

No, the noncustodial parent may not claim a child as a qualifying child for the earned income credit based solely on the custodial parent's release of a claim to exemption for the child.

  • The custodial parent may still be able to claim the child as a qualifying child for the earned income credit if the residency test and all the other requirements are met.

Note: The custodial parent is generally the parent with whom the child lives for the greater number of nights during the year. The noncustodial parent is the other parent. If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. For details and an exception for a parent who works at night, see Publication 501, Exemptions, Standard Deduction, and Filing Information.

Must I be entitled to claim a child as a dependent to claim the earned income credit based on the child being my qualifying child?

Answer:

You don't have to be entitled to claim the child as a dependent to claim the earned income credit based on the child being your qualifying child. However, the child can't file a joint return unless the joint return is only for refund of income tax withheld or estimated tax paid. If your qualifying child was married at the end of the year, he or she can't be your qualifying child unless you meet one of the following conditions:

  • You're entitled to claim an exemption for the child, or
  • The reason you're not entitled to claim an exemption for the child is that you released a claim to a dependency exemption for the child under the special rule for divorced or separated parents or parents who live apart.
If both parents who were never married want to claim the earned income credit, which parent is entitled to claim the credit as an eligible individual with a qualifying child?

Answer:

If they otherwise meet all of the requirements to claim the earned income tax credit (EITC), unmarried parents with a qualifying child may choose which parent will claim the credit.

  • If there are two qualifying children, each parent may claim the credit based on one child.
  • One parent may claim the credit based on both children.
  • If both parents claim the same qualifying child for the EITC, but don't file a joint return together, the IRS will apply tie-breaker rules and treat the child as the qualifying child of the parent with whom the child lives for the longer amount of time in the tax year. If the child lives with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who has the higher adjusted gross income (AGI) for the tax year.
  • If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who has the highest AGI for the tax year.
  • If a parent can claim the child as a qualifying child but neither parent claims the child, the child is treated as the qualifying child of the person who has the highest AGI, but only if that person's AGI is higher than the AGI of any of the child's parents who can claim the child as a qualifying child.

Subcategory:

Is child support considered earned income when calculating the earned income credit?

Answer:

No, for purposes of calculating the earned income credit, child support isn't considered earned income.

Examples of items that aren't earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Don't include any of these items in your earned income.

Can I claim the earned income credit on Form 1040EZ?

Answer:

Yes, you can use Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, to claim the earned income credit (EIC), provided you don't have a qualifying child and your investment income is $3,400 or less (for 2016). Your investment income is the total amount of interest from line 2 of Form 1040EZ and any tax-exempt interest.

If you don't meet the requirements for filing Form 1040EZ, you must use Form 1040A or Form 1040, U.S. Individual Income Tax Return; but if your investment income is more than $3,400, you can't claim the EIC.

Subcategory:

Frequently Asked Question Subcategories for Earned Income Tax Credit